830 CMR, § 62C.26.1

Current through Register 1536, December 6, 2024

Section 62C.26.1 - Assessments

(1)Statement of Purpose; Application of 830 CMR 62C.26.1.

(a) The purpose of 830 CMR 62C.26.1 is to describe in detail the procedures for the assessment of taxes by the Commissioner, under M.G.L. c. 62C, §§ 3, 26, 27, 28, 29, 30, 31, 32, and 36.

(b)830 CMR 62C.26.1 applies to all taxes imposed under M.G.L. chs. 60A; 62 through 64J; 65B; 65C; 121A, § 10 and 138, § 21.

(c)Organization. 830 CMR 62C.26.1 is organized as follows:

1. Statement of Purpose; Application of 830 CMR 62C.26.1; Organization

2. Definitions

3. Assessment upon Filing of a Return - General Rule

4. Deficiency Assessment by the Commissioner - General Rule

5. Overpayment Determination - General Rule

6. Requirements and Procedures for a Deficiency Assessment

7. Corrections of Returns

8. Deficiency Assessment for Failure to File or for False or Fraudulent Returns

9. Deficiency Assessment for Nonresident's Failure to File

10. Deficiency Assessment upon Executor's Omission of items from the Gross Estate

11. Deficiency Assessment upon Omission of Gross Income

12. Deficiency Assessment upon Omission of Tax

13. Double Deficiency Assessment for Taxpayer's Failure to File or Correct

14. Double Deficiency Assessment for Filing a False or Fraudulent Return

15. Jeopardy Assessments

16. Assessment with Respect to a Federal Change

17. Application of Overpayment to Other Taxes; Refund of Overpayment

18. Correction of Erroneous Deficiency Assessment or Erroneous Receipt of Tax Payment

19. Extension of Limitation Period for Assessment

(2)Definitions. For the purposes of 830 CMR 62C.26.1 the following terms shall have the following meanings:

Abatement, the determination by the Commissioner that an assessment exceeds the amount properly due and the adjustment by the Commissioner of the amount in the Commissioner's assessment records.

Assessment, the process of the Department of Revenue's determination or verification of the amount of tax, as provided under M.G.L. c. 62C, §§ 24, 25, and 26, imposed and due from a taxpayer under M.G.L. chs. 60A; 62 through 64J; 65B; 65C; 121A, § 10; and 138, § 21; and the entry of the amount of the tax due in the Commissioner's assessment records; or the taxpayer's calculation and declaration of the tax due, as provided under M.G.L. c. 62C, § 26(a), completed in full on a return, including any amendment, correction, or supplement thereto, by the taxpayer or the taxpayer's representative and duly filed with the Commissioner, in accordance with rules adopted by the Commissioner.

Assessment Records, the official records of the Department that indicate the amount of tax due and assessed by the Commissioner.

Commissioner, the Commissioner of Revenue or the Commissioner's designee duly authorized to perform the duties of the Commissioner.

Deficiency, the difference between the amount of any earlier assessment under M.G.L. c. 62C, § 26(a) or (b), if any, for the same tax period and the amount of tax properly due as determined by the Commissioner, if the amount of tax properly due is greater than the amount of the earlier assessment.

Deficiency Assessment, the assessment of a deficiency.

Department, the Department of Revenue.

Double Deficiency Assessment, a deficiency assessment under M.G.L. c. 62C, § 28, at up to double the amount of tax due.

Executor, the executor or administrator of the estate of a decedent, or, if there is no executor or administrator appointed, qualified, and acting within Massachusetts, any person in actual or constructive possession of any property of the decedent.

Instruction to Bill, an internal Department document in either electronic or paper form prepared in connection with some, but not all, assessments that includes the Commissioner's signed and dated statement that a deficiency assessment has been made and the Commissioner's request that a notice of assessment be issued to the taxpayer. The signature may be in electronic form or appear on a paper Instruction to Bill.

Jeopardy Assessment, an assessment of a deficiency upon the Commissioner's determination that the collection of any tax will be jeopardized by delay, as authorized by M.G.L. c. 62C, § 29.

Limitation Period for Assessment, the period within three years after the date a return is filed or required to be filed, whichever is later, or the period of extension for assessment agreed upon in writing by the Commissioner and the taxpayer.

Nonresident, any natural person who is not a resident or inhabitant of Massachusetts as defined in M.G.L. c. 62, § 1(f).

Notice of Assessment, the notification to a taxpayer, under M.G.L. c. 62C, § 31, that the Commissioner has made a deficiency assessment.

Notice of Change. Notice provided under M.G.L. c. 62C, § 26(c) of correction of a return by Commissioner based on arithmetic, clerical, or other obvious error on the face of the return, information from Department of Revenue records, or information from third party sources.

Notice of Intention to Assess (NIA), the notification to a taxpayer, under M.G.L. c. 62C, § 26(b), that the Commissioner intends to make a deficiency assessment after 30 days.

Overpayment, the difference between the amount of tax paid and the amount of tax properly due, if the amount of tax paid is greater than the amount of tax properly due.

Overpayment Determination, the calculation and the entry of the amount of an overpayment in the Commissioner's assessment records.

Refund, the amount paid by the Commissioner to a taxpayer for the balance of any overpayment or abatement after any application of the overpayment or abatement to any unpaid taxes of the taxpayer.

Return, a taxpayer's signed declaration of the tax due, if any, properly completed and filed by the taxpayer in the manner prescribed by the Commissioner.

Tax or Taxes, any tax imposed under M.G.L. chs. 60A, §§ 62 through 64J; 65B; 65C, 121A, § 10 and 138, § 21, and any act in addition thereto or amendment thereof, and including any interest or penalties imposed under M.G.L. c. 62C, §§ 28, 30 and 32 through 35.

Taxpayer, any person required to pay taxes imposed under M.G.L. chs. 60A, §§ 62 through 64J; 65B; 65C, 121A, § 10, and 138, § 21 or required to file returns under M.G.L. c. 62C, §§ 6 through 8, 10 through 14, and 16 through 18.

Taxpayer's Last Known Address, the taxpayer's address as it appears in the taxpayer's most recent return for the particular tax or a properly completed and submitted Change of Taxpayer's Address form, for a particular tax, whichever is last received by the Department.

(3)Assessment upon Filing of a Return.

(a)General Rule. When a taxpayer files a return under M.G.L. chs. 60A, §§ 62 through 64J; 65B; 65C; 121A, § 10; and 138, § 21, including any properly completed amendment, correction, or supplement thereto, in accordance with rules adopted by the Commissioner, the tax is deemed to be self-assessed at the amount shown as the tax due on the return or at the amount properly due, whichever is less, and at the time when the return is filed or required to be filed, whichever occurs later.

(b)Changes To Taxpayer Self-assessments. To adjust the self-assessed tax shown on a previously filed return, a taxpayer is required to file an amended return in accordance with 830 CMR 62C.26.2. For procedures relating to reporting federal and state changes, see also 830 CMR 62C.30.1 and 62C.30A.1.

(4)Deficiency Assessment by the Commissioner - General Rule. If the Commissioner determines that the full amount of the tax has not been assessed or deemed to be assessed, the Commissioner may assess the full amount of the tax. The Commissioner will give taxpayers written notice of deficiency assessments, as explained in 830 CMR 62C.26.1(6).

(5)Overpayment Determination - General Rule. If the Commissioner determines that a taxpayer has paid more than the full amount of the tax, the Commissioner may, in the Commissioner's discretion, apply the amount of the overpayment against any unpaid amounts of any other taxes due from the taxpayer. The Commissioner will refund the balance of any overpayment to the taxpayer, as explained in 830 CMR 62C.26.1(17).

(6)Requirements and Procedures for a Deficiency Assessment.

(a)General. If the Commissioner determines that the full amount of any tax has not been assessed or deemed to be assessed, the Commissioner will first give a taxpayer written notice of the Commissioner's intention to make a deficiency assessment, unless this requirement is otherwise excepted under 830 CMR 62C.26.1(6)(c). The taxpayer may confer with the Commissioner as to the intended assessment within 30 days after the issuance of the notice of intention to assess. After 30 days and within the limitation period for assessment, the Commissioner will assess the tax remaining due.

(b)Notice of Intention to Assess.

1.Contents of Notice.

a.Required Information. The notice of intention to assess will contain the following:

i. The name of the taxpayer, as shown in the records of the Department;

ii. The amount of the proposed deficiency assessment, including any applicable interest and penalties from the statutory due date and including interest for 30 days calculated from the date of the issuance of the notice of intention to assess;

iii. A statement that the taxpayer may confer with the Commissioner as to the assessment, as provided under 830 CMR 62C.26.1(6)(d); and

iv. The time within which the taxpayer must confer with the Commissioner, as provided under 830 CMR 62C.26.1(6)(d)2.

b.Discretionary Information. The notice of intention to assess will ordinarily contain the following, but the lack of any one or more of these items will not affect the validity of the notice of intention to assess:

i. The taxpayer identification number;

ii. The type of tax or taxes assessed;

iii. The amount of any payments made by the taxpayer since the filing of the taxpayer's return;

iv. The amount of balance due after application of any payments made by the taxpayer;

v. The tax period or periods;

vi. A brief explanation of the deficiency assessment;

vii. A statement regarding the taxpayer's option to make voluntary payment upon receipt of the notice of intention to assess, as provided under 830 CMR 62C.26.1(6)(a);

viii. A citation of applicable law; and

ix. Any additional information the Commissioner deems appropriate.

2.Effect of Failure to Receive Notice of Intention to Assess. A taxpayer's failure to receive a notice of intention to assess that has been mailed by the Commissioner does not affect the validity of a subsequent assessment.

(c)Exceptions to Requirement of the Issuance of Notice of Intention to Assess. The Commissioner is not required to give a taxpayer notice of the intention to assess a deficiency under the following circumstances:

1. Corrections of returns based on arithmetic, clerical or other obvious error on the face of the return, information from Department of Revenue records, or information from third party sources, as explained in 830 CMR 62C.26.1(7);

2. False or fraudulent return filed with intent to evade a tax, as explained in 830 CMR 62C.26.1(8);

3. Failure to file a return, as explained in 830 CMR 62C.26.1(8);

4. Double deficiency assessment upon taxpayer's failure to file or correct, as explained in 830 CMR 62C.26.1(13);

5. Double deficiency assessment for filing a false or fraudulent return, as explained in 830 CMR 62C.26.1(14);

6. Jeopardy assessment, as explained in 830 CMR 62C.26.1(15).

(d)Taxpayer's Conference with the Commissioner Before Assessment.

1.Request for a Conference.

a. A taxpayer who has received notice of the Commissioner's intention to assess a deficiency may confer with the Commissioner within 30 days after the date of the issuance of the notice of intention to assess.

b. A taxpayer or the taxpayer's representative must send a written request for a conference to the Commissioner at the address shown on the notice of intention to assess.

2.Timely Request for a Conference. A timely request in writing for a conference must be postmarked by the 25^th day following the issuance of the notice of intention to assess. A request for a conference postmarked after the 25^th day following the issuance of the notice of intention to assess will be considered solely at the discretion of the Commissioner. If the request for a conference is not received in sufficient time for a conference to be held within 30 days of the issuance of the notice of intention to assess, the Commissioner may assess the tax, unless the Commissioner in his or her discretion agrees to hold the conference after the 30^th day, subject to the Commissioner's right to require a consent to extension of time agreement as described in 830 CMR 62C.26.1(6)(d)3.

3.Conference to Be Held within 30 Days.

a. Any taxpayer who submits a timely request for a conference must be available to confer within 30 days of the issuance of the notice of intention to assess. The Commissioner may, at the discretion of the Commissioner, hold the requested conference after the 30^th day.

b. If the taxpayer is not available to confer with the Commissioner within 30 days of the issuance of the notice of intention to assess and wishes to confer with the Commissioner after the 30^th day and the Commissioner grants the request for a conference, the Commissioner may require as a prerequisite to granting a conference that the taxpayer sign a consent to extension of time agreement, as provided in 830 CMR 62C.26.1(19).

4.Conduct of the Taxpayer's Conference. The taxpayer's conference with the Commissioner before assessment is an informal proceeding.

5.Taxpayer's Right to One Conference with the Commissioner. The Commissioner or the Commissioner's duly authorized representative will confer at least once with any taxpayer who makes a timely request for a conference and who is available to confer within the 30 days. The Commissioner may grant additional conferences with the taxpayer at the sole discretion of the Commissioner.

6.Extension of Limitation Period for Assessment for Subsequent Taxpayer's Conferences. If the taxpayer requests more than one conference with the Commissioner and the Commissioner grants the request for an additional conference or conferences, the Commissioner may require that the taxpayer sign a consent to extend the limitation period for assessment, as provided under 830 CMR 62C.26.1(19), before the Commissioner agrees to grant any additional conferences to the taxpayer.

(e)Taxpayer's Payment upon Receipt of the Notice of Intention to Assess.

1. A taxpayer may voluntarily pay the amount due or any portion thereof upon receipt of the notice of intention to assess. This payment will stop the accrual of any additional interest and applicable penalties on the amount paid.

2. If the taxpayer makes a full payment of the amount shown on the notice of intention to assess, the Commissioner will issue a written notice of assessment to the taxpayer, according to 830 CMR 62C.26.1(6)(g) through (i), and the notice will ordinarily state no balance due.

3. The taxpayer's right to apply for abatement of the deficiency assessment accrues immediately upon the date of assessment. The taxpayer may make application for abatement as provided by M.G.L. c. 62C, § 37 and 830 CMR 62C.37.1.

4. The taxpayer's payment of part of the balance due will be reflected ordinarily as a credit in the notice of assessment issued to the taxpayer.

(f)Time for Deficiency Assessment. A deficiency assessment occurs on the date the Commissioner enters the amount of the assessment upon his or her records, which may be in electronic or paper form. Generally, the date of deficiency assessment is the date of the Notice of Assessment unless an Instruction to Bill has been prepared, in which case the date of assessment is the earlier of the date of the Instruction to Bill or the date of the Notice of Assessment.

(g)Limitation Period for Assessment.

1.General Three-year Limitation Period for Assessment. The Commissioner may make any deficiency assessment within three years after the date the applicable return was filed or the return was required to be filed, whichever occurs later, except as otherwise provided in 830 CMR 62C.26.1(6)(g)2.

2.Exceptions to General Three-year Limitation Period for Assessment. The Commissioner is not required to make a deficiency assessment within the general three-year limitation period for assessments under the following circumstances:

a. False or fraudulent return filed with intent to evade a tax, as explained in 830 CMR 62C.26.1(8);

b. Failure to file a return, as explained in 830 62C.26.1(8);

c. Deficiency assessment upon executor's omission of items from the gross estate, as explained in 830 CMR 62C.26.1(10);

d. Deficiency assessment upon omission of gross income, as explained in 830 CMR 62C.26.1(11);

e. Deficiency assessment upon omission of tax, as explained in 830 CMR 62C.26.1(12);

f. Double deficiency assessment upon taxpayer's failure to file, as explained in 830 CMR 62C.26.1(13);

g. Double deficiency assessment for filing a false or fraudulent return, as explained in 830 CMR 62C.26.1(14); and

h. A valid consent to extension agreement, as explained in 830 CMR 62C.26.1(19).

(h)Notice of Deficiency Assessment.

1.Contents of Notice.

a.Required Information. A written notice of assessment will contain the following:

i. The name of the taxpayer;

ii. The amount of the deficiency assessment;

iii. The amount of any balance due;

iv. The date payment of the deficiency assessment is due.

b.Discretionary Information. The written notice of assessment will ordinarily contain the following, but the lack of any one or more of these items will not affect the validity of the notice of assessment:

i. The taxpayer identification number;

ii. The type of tax or taxes assessed;

iii. The tax period or periods;

iv. The date of the assessment; and

v. Any additional information the Commissioner deems appropriate.

2.Effect of Failure to Receive Notice of Assessment. A taxpayer's failure to receive a written notice of deficiency assessment that has been mailed by the Commissioner does not affect the validity of the assessment.

(i)Due Date of Payment of Deficiency Assessment. The amount of the balance due from a taxpayer generally must be paid on or before the 30^th day from the date of the issuance of the notice of assessment. See 830 CMR 62C.26.1(16). The taxpayer's failure to pay the balance due by the due date will subject the taxpayer to the imposition of additional interest, penalties, and collection activities.

(j)Interest Charges on the Balance Due. The amount of the balance due includes interest calculated to the 30^th day following the date of the issuance of the notice of assessment.

(k)Offsetting Deficiencies with Overpayments.

1. If the Commissioner audits or verifies returns for two or more tax periods for the same tax and determines from the audit or verification that the taxpayer had deficiencies in one or more tax periods and overpayments in one or more tax periods, the Commissioner will first offset any overpayments against any deficiency assessments and will then refund only the net overpayments in accord with the provisions of 830 CMR 62C.26.1(17).

2. The taxpayer is not required to file an amended return under 830 CMR 62C.26.2 to obtain any refund of a net overpayment determined under 830 CMR 62C.26.1(6)(k).

(l)Application of Requirements and Procedures of Deficiency Assessments to Determinations of Personal Liability Against Responsible Persons. 830 CMR 62C.26.1 and specifically 830 CMR 62C.26.1(6), are not intended to control the procedures required for determinations of personal liability and deemed assessment against responsible persons. The Commissioner will make determinations of personal liability against responsible persons under the procedures of the State Tax Administration Regulation on Responsible Persons, 830 CMR 62C.31A.1.

(7)Corrections of Returns.

(a)General. If the Commissioner corrects a return based on arithmetic, clerical, or other obvious error on the face of the return, information from Department of Revenue records, or information from third party sources, he or she may correct the self-assessment without giving prior notice to the taxpayer under M.G.L. c. 62C, § 26(b). For example, the Commissioner need not provide prior notice to the taxpayer if the return omits or understates items of taxable income that are known from any third party source.

(b) Examples of arithmetic, clerical, or other errors obvious on the face of a return, information from Department of Revenue records, or information from third party sources. The following list is intended to be illustrative, not exhaustive.

1. An error in addition, subtraction, multiplication, or division shown on a return;

2. An incorrect use of a Department of Revenue table or an Internal Revenue Service table if the incorrect use seems apparent from other information on a return;

3. Inconsistent entries on a return, if it seems apparent which of the inconsistent entries on the return is correct and which is incorrect;

4. An omission of information that is required on a return in order to substantiate an entry on the return;

5. An entry on a return of a deduction or a credit in an amount that exceeds a statutory limit that is either a specified monetary amount or a percentage, ratio, or fraction and if the items entering into the application of the limit appear in the return; or

6. An understatement or omission of an item of taxable income on a return as to which the Department has information from third party sources, including other state agencies, as to the actual amount paid to the taxpayer.

(c)Notice of Change. Concurrently with making the correction, the Commissioner will notify the taxpayer of the change and the reason for the change by way of a Notice of change. Any amount due must be paid within the 30 days to avoid additional penalties, interest and collection action.

1. If the taxpayer agrees with the change or fails to dispute the change explained in the Notice of change in writing within 30 days from the date appearing on the Notice, or within any extended period permitted by the Department, the corrected self-assessment will become final and no further action is required on the part of the Department or the taxpayer. The Notice of change will be the Notice of assessment.

2. If the taxpayer does not agree with the change, the taxpayer may dispute the correction described in the Notice of change within 30 days and the Commissioner may then issue a deficiency assessment under M.G.L. c. 62C, § 26(b). Under these circumstances, the Notice of change will be treated as the Notice of intention to assess and the taxpayer may request a pre-assessment hearing in accordance with M.G.L. c. 62C, § 26(b) within the 30 day period set out in the Notice of change.

(8)Deficiency Assessment for Failure to File or for False or Fraudulent Returns.

(a)General. If the Commissioner determines that a taxpayer has failed to file a return or that the taxpayer has filed a false or fraudulent return with intent to evade a tax, and that the full amount of the tax has not been assessed, the Commissioner may make a deficiency assessment according to the Commissioner's best information and belief, without issuing a notice of intention to assess, under M.G.L. c. 62C, § 26(d).

(b)Notice of Intention to Assess Not Required. If the Commissioner makes a deficiency assessment for failure to file or for filing a false or fraudulent return, the Commissioner need not issue a Notice of Intention to assess under 830 CMR 62C.26.1(6)(b) and (d).

(c)Basis for Commissioner's Determination. The Commissioner's determination that the taxpayer has failed to file a return or has filed a false or fraudulent return may be based on the verification of a return for a prior or subsequent tax period or a return for another type of tax or on any other information.

(d)Requirements for a Deficiency Assessment for Failure to File or for False or Fraudulent Return. The Commissioner will issue a written notice of deficiency assessment to a taxpayer, as prescribed under 830 CMR 62C.26.1(6)(f) through (i).

(e) No limitation period for deficiency assessment for failure to file or for false or fraudulent return. The Commissioner may make a deficiency assessment for failure to file or for false or fraudulent return at any time, without regard to the general three-year limitation period for assessment.

(f) Application of deficiency assessment for failure to file to double deficiency assessment for failure to file. The Commissioner may make a deficiency assessment for failure to file, without giving notice of the Commissioner's intention to assess. The Commissioner may also make a double deficiency assessment for failure to file, if the requirements under 830 CMR 62C.26.1(13)(c) are met.

(g) Application of deficiency assessment for false or fraudulent return to double deficiency assessment for filing a false or fraudulent return. The Commissioner may make a deficiency assessment for false or fraudulent return, without giving notice of the Commissioner's intention to assess. The Commissioner may also make a double deficiency assessment for filing a false or fraudulent return, if the requirements under 830 CMR 62C.26.1(14)(c) are met.

(9)Deficiency Assessment for Nonresident's Failure to File.

(a)General. If a nonresident fails to file a Massachusetts personal income tax return, under M.G.L. c. 62, § 5A, c. 62C, § 6, and 830 CMR 62.5A.1, the Commissioner may assess the tax on the nonresident's Massachusetts gross income, according to the Commissioner's best information and belief, without allowance for deductions or exemptions and with interest and penalties. See also 830 CMR 62.5A.1(12)(a)3.

(b)Application of Other Penalties. The deficiency assessment for a nonresident's failure to file is in addition to all other taxes and penalties that may be imposed under M.G.L. c. 62C.

(c)No Limitation Period for Assessment. Because no return has been filed, the general limitation period of three years from the filing of a return does not apply to a deficiency assessment for a nonresident's failure to file, and the Commissioner may assess a nonresident for failure to file at any time.

(d)Requirements for a Deficiency Assessment for a Nonresident's Failure to File. The Commissioner will follow the procedures and requirements for a deficiency assessment, as prescribed under 830 CMR 62C.26.1(6).

(10)Deficiency Assessment upon Executor's Omission of Items from the Gross Estate.

(a)General. If an executor omits from a decedent's gross estate on an estate tax return items includable in the gross estate that exceed 25% of the gross estate reported on the return, under M.G.L. c. 62C, § 26(f) the Commissioner may assess the tax due at any time within six years after the return was filed.

(b)Limitation Period for Assessment. The general three-year limitation period for assessment does not apply to a deficiency assessment made upon an executor's omission of items includable in the gross estate that exceed 25% of the gross estate reported on the return. The Commissioner may instead make a deficiency assessment upon an executor's omission of items from the gross estate at any time within six years after the estate tax return was filed.

(c)Disclosure of Omitted Item Elsewhere on Return. The Commissioner will not consider for the purposes of the calculation of the amount in excess of 25% any item omitted from an estate tax return if the item was disclosed on the return or in a statement attached to the return, in a manner adequate to apprise the Commissioner of the nature and amount of the item.

(d)Requirements for a Deficiency Assessment for Executor's Omission of Items from Gross Estate. The Commissioner will follow the procedures and requirements for a deficiency assessment, as prescribed under 830 CMR 62C.26.1(6).

(11)Deficiency Assessment upon Omission of Gross Income.

(a)General. If a taxpayer omits from gross income any amount properly includable in gross income that exceeds 25% of the amount of gross income in any return filed pursuant to M.G.L. c. 62C, §§ 6 or 11, under M.G.L. c. 62C, § 26(h) the Commissioner may assess the tax due at any time within six years after the return was filed.

(b)Limitation Period for Assessment. The general three-year limitation period for assessment does not apply to a deficiency assessment made upon the omission of gross income that exceeds 25% of the amount of gross income reported in the return. The Commissioner may instead make a deficiency assessment upon the omission of gross income within six years after the return was filed.

(c)Disclosure of Omitted Gross Income Elsewhere on Return. The Commissioner will not consider for the purpose of the calculation of the amount in excess of 25% any amount of gross income omitted from the return if the amount was disclosed on the return or in a statement attached to the return in a manner adequate to apprise the Commissioner of the nature and amount of the gross income.

(d)Requirements for a Deficiency Assessment upon Omission of Gross Income. The Commissioner will follow the procedures and requirements for a deficiency assessment, as prescribed under 830 CMR 62C.26.1(6).

(12)Deficiency Assessment upon Omission of Tax.

(a)General. If a taxpayer omits from tax any amount properly includable in tax that exceeds 25% of the amount of tax reported in any return filed pursuant to M.G.L. c. 62C, §§ 12, 14, or 16, under M.G.L. c. 62C, § 26(i) the Commissioner may assess the tax due at any time within six years after the return was filed.

(b)Limitation Period for Assessment. The general three-year limitation period for assessment does not apply to a deficiency assessment made upon the omission of tax that exceeds 25% of the amount of tax reported in the return. The Commissioner may instead make a deficiency assessment upon omission of tax within six years after the return is filed.

(c)Disclosure of Omitted Tax Elsewhere on Return. The Commissioner will not consider for the purpose of the calculation of the amount in excess of 25% any amount of tax omitted if the transaction giving rise to the tax is disclosed on the return or in a statement attached to the return in a manner adequate to apprise the Commissioner of the existence and nature of the transaction.

(d)Requirements for a Deficiency Assessment upon Omission of Tax. The Commissioner will follow the procedures and requirements for a deficiency assessment, as prescribed under 830 CMR 62C.26.1(6).

(13)Double Deficiency Assessment for Taxpayer's Failure to File or Correct.

(a)General. If the Commissioner notifies a taxpayer that the taxpayer failed to file a return or that the taxpayer filed an incorrect or insufficient return and the taxpayer refuses or neglects to file a proper return or correct the return within 30 days of the date of notification, the Commissioner may determine the tax due and according to the Commissioner's best information and belief, and may assess the tax at up to double the amount of the tax due, under M.G.L. c. 62C, § 28.

(b)Application of Other Penalties. The doubling of the assessment for a taxpayer's failure to file or correct is a tax additional to any other remedies or penalties that may be imposed under M.G.L. c. 62C.

(c)Requirements for a Double Deficiency Assessment for Failure to File or Correct.

1. The Commissioner will send the taxpayer a written notification, requesting that the taxpayer file a proper return or requesting that the taxpayer correct the taxpayer's incorrect or insufficient return.

2. The written notification will ordinarily contain the following:

i. The name of the taxpayer;

ii. The taxpayer identification number;

iii. The type of tax for which the return must be filed;

iv. The tax period or periods for which the return must be filed;

v. An explanation of the double deficiency assessment that may be imposed if the taxpayer refuses to file a proper return or correct the return; and

vi. Any other information the Commissioner deems appropriate.

3. The Commissioner will issue a written notice of deficiency assessment to a taxpayer, as prescribed under 830 CMR 62C.26.1(6)(f) through (i).

(d)Limitation Period for Assessment.

1.Failure to File a Return. Because the taxpayer failed to file any return, the general limitation period of three years from the filing of a return does not apply, and the Commissioner may make a double deficiency assessment for failure to file at any time.

2.Failure to Correct a Return. The Commissioner may make a double deficiency assessment for failure to correct a return within the general three-year limitation period for assessment.

(14)Double Deficiency Assessment for Filing a False or Fraudulent Return.

(a)General. If the Commissioner determines from the verification of a return or by any other means that a taxpayer has filed a false or fraudulent return in a willful attempt to defeat or evade a tax in any manner, the Commissioner may determine the tax due, according to the Commissioner's best information and belief, and may assess the tax at up to double the amount of the tax due, under M.G.L. c. 62C, § 28.

(b)Notice of Intention to Assess Not Required. If the Commissioner makes a double deficiency assessment for filing a false or fraudulent return, the Commissioner need not issue a notice of intention to assess under 830 CMR 62C.26.1(6)(b) and (d).

(c)Application of Other Penalties. The doubling of the assessment for filing a false or fraudulent return is a tax additional to any other remedies and penalties that may be imposed under M.G.L. c. 62C.

(d)Requirements for a Double Deficiency Assessment for Filing of a False or Fraudulent Return. The Commissioner will follow the procedures and requirements for a deficiency assessment, as prescribed under 830 CMR 62C.26.1(6)(f) through (i).

(e)No Limitation Period for Double Deficiency Assessment for Filing of a False or Fraudulent Return. The Commissioner may make a double deficiency assessment for filing of a false or fraudulent return at any time, without regard to the general three-year limitation period for assessment. See M.G.L. c. 62C, § 26(d) and 830 CMR 62C.26.1(8).

(15)Jeopardy Assessments.

(a)General. If the Commissioner determines that delay may jeopardize the collection of any taxes, the Commissioner may immediately make a jeopardy assessment according to the Commissioner's best information and belief under M.G.L. c. 62C, § 29. The Commissioner may make a jeopardy assessment whether the time otherwise prescribed by law or by regulation for filing the return or paying the tax has expired.

(b)Interest and Penalties. A jeopardy assessment will include interest and penalties.

(c)Payment of Jeopardy Assessment. The amount of a jeopardy assessment is immediately due and payable. The Commissioner will make immediate demand for the amount of a jeopardy assessment.

(d)Collection of Jeopardy Assessment. If the taxpayer neglects or refuses to pay the amount of a jeopardy assessment, the Commissioner may pursue any and all available remedies to collect the amount of the jeopardy assessment.

(e)Determination that Collection of Tax may be Jeopardized. A determination that collection of any tax may be jeopardized by delay is made in each instance based on the facts and circumstances of the individual case. The determination is a matter of the Commissioner's discretion. The Commissioner may use the following criteria to determine that delay will jeopardize collection, but the Commissioner is in no way limited to these criteria:

1. A taxpayer is arrested by law enforcement officers with substantial amounts of cash, its equivalent, or contraband in the taxpayer's possession, which is or appears to be unreported income;

2. A taxpayer is or appears to be designing to leave Massachusetts immediately or to go into hiding immediately;

3. A taxpayer is or appears to be immediately designing to place the taxpayer's property beyond the reach of Massachusetts' taxing jurisdiction by concealing it, dissipating it, removing it from Massachusetts, or transferring it to some other person;

4. A taxpayer's financial solvency is or appears to be imperiled;

5. A taxpayer fails to file timely returns for and pay withholding, room occupancy, sales, meals, or use tax after receiving notice that such returns are past due, and the Commissioner determines that the circumstances indicate that the tax has actually been withheld or collected and that any further delay will jeopardize the collection of the tax; or

6. Any other reason that in the Commissioner's discretion is sufficient to support the Commissioner's belief that delay may jeopardize collection.

(f)Requirements for a Jeopardy Assessment. The Commissioner will send a written notice of assessment to the taxpayer under the provisions of 830 CMR 62C.26.1(6)(f) through (i).

(16)Assessment with Respect to a Federal Change. See State Tax Administration Regulation on Changes in Federal Taxable Income, 830 CMR 62C.30.1.

(17)Application of Overpayment to Other Taxes; Refund of Overpayment.

(a)General. If the Commissioner determines from the verification of a return or otherwise that more than the full amount of any tax has been paid or assessed and paid, the Commissioner may make an overpayment determination. The Commissioner, as a matter of discretion, may apply the amount of the overpayment against any unpaid amounts of any other taxes due from the taxpayer. The Commissioner will refund the balance of any overpayment to the taxpayer as specified in 830 CMR 62C.26.1(17)(c).

(b)Time of Overpayment Determination.

1.Overpayment of $10.00 or More. The date the over-payment determination is made is the date the Commissioner applies the amount of the overpayment to any unpaid amounts of any other taxes or, if no application of overpayment to other taxes is made, the date the Commissioner issues a refund check.

2.Overpayment of Less Than $10.00. The date the overpayment determination is made is the date the Commissioner applies the amount of the overpayment to any unpaid amounts of any other taxes or, if no application of overpayment to other taxes is made, the date the Commissioner issues a refund check of the amount of the overpayment or the date the Commissioner applies the amount of the overpayment to the taxpayer's credit on the Commissioner's books of account.

(c)Refund of Overpayment Determinations.

1.Balance of $10.00 or More. The Commissioner will refund to the taxpayer the balance of any overpayment of $10.00 or more, after any application of the overpayment to other taxes.

2.Balance of Less Than $10.00.

a. The Commissioner, as a matter of discretion, may automatically refund to the taxpayer the balance of any overpayment of less than $10.00.

b. If the taxpayer has been informed by the Department that the Commissioner has already made an overpayment determination of less than $10.00, the taxpayer may make application for the balance of the overpayment by sending a letter containing the taxpayer's name, the taxpayer's Social Security number or tax identification number, whichever is applicable, and the tax period or periods in which the overpayment was made to the Department at the following address:

Massachusetts Department of Revenue

P.O. Box 7010

Boston, Massachusetts 02204

c. If the taxpayer has not been informed by the Department that the Commissioner has made any overpayment determination, the taxpayer may make application for the balance of the overpayment by filing an amended return before the expiration of the statute of limitations contained in M.G.L. c. 62C, §§ 30, 30A, 36 and/or 37, as applicable.

(d)Interest on Refunds of Overpayments.

1.Interest Rate.

a. Interest accruing on or after January 1, 1993 on a refund of an overpayment determination will be paid at the Federal short term rate plus four percentage points, compounded daily, or any other rate, as may be prescribed by M.G.L. c. 62C, § 32.

b. Effective July 1, 2003, the interest rate paid by the Commissioner on overpayments is reduced to the Federal short-term rate determined under § 6621(b) of the Internal Revenue Code, as amended and in effect for the taxable year plus two percentage points, simple interest.

2.Period for Computing Interest. Except as provided in 830 CMR 62C.33.1(7)(c) and (d), interest is computed from the due date of the applicable return without regard to extensions, or date of receipt of the overpayment, or the date of filing of the return, whichever is later, to a date no more than 30 days before the issuance of the refund.

3.Payment of Refund within Period of Time Prescribed by M.G.L. c. 62C, § 40 for the Applicable Tax Year. If the Commissioner refunds the balance of an overpayment within 120 days (or other applicable period) after the last day prescribed for filing the return, determined without regard to any extension of time, or within 120 days (or other applicable period) after the date the return reporting the overpayment was filed, if the return was filed after the last day prescribed for filing the return, interest is not paid to a taxpayer on the overpayment.

4. No interest paid on certain refunds. Interest is not paid on any of the following:

a. A refund made pursuant to Article VIII of the Compact on Taxation of Motor Fuels consumed by Interstate Buses, St. 1963, c. 465, § 1;

b. A refund of the deeds excise imposed by M.G.L. c. 64D; or c. Refunds made under the following provisions:

i. M.G.L. c. 64A, §§ 7 and 7A;

ii. M.G.L. c. 64E, § 5;

iii. M.G.L. c. 64F, § 4; or

iv. M.G.L. c. 64G, § 7A.

(e)Commissioner's Tender of Refund. The Commissioner will send any refund, including interest, to the taxpayer at the taxpayer's last known address. No additional interest will accrue on the amount of any refund after the Commissioner's tender of refund.

(f)Taxpayer's Acceptance of Refund. A taxpayer's acceptance of a refund check will not prejudice any right of the taxpayer to claim any additional overpayment.

(g)Requirement of Properly Filed Return. For purposes of any return required to be filed to obtain a refund under 830 CMR 62C.26.1(17), the Commissioner will not treat a return as filed until the return is filed on a form prescribed by the Commissioner, containing the following information:

1. The taxpayer's name, address, tax identification number, and any required signatures; and

2. Sufficient information to permit the mathematical verification of the tax liability shown on the return.

(18)Correction of Erroneous Deficiency Assessment or Erroneous Receipt of Tax Payment.

(a)General. If the Commissioner determines that any tax has been assessed in excess of the proper tax due because of any Department clerical error or that any tax payment was received in error, the Commissioner may, as a matter of discretion, correct the error at any time and adjust the assessment accordingly.

(b)Interest on Refunds Made Because of Corrections of Erroneous Deficiency Assessment or Erroneous Receipt of Tax Payment.

1.Interest on Refunds as Provided under M.G.L. c. 62C, § 40. The Commissioner will pay interest on any refunds made under M.G.L. c. 62C.26.1(17)(d).

2.Calculation of Interest. The Commissioner will calculate the interest to be paid to a taxpayer from the date of payment of the amount of the erroneous deficiency assessment or of the date of the erroneous receipt to a date no more than 30 days before the issuance of the refund.

(19)Extension of Limitation Period for Assessment.

(a)General. The Commissioner and the taxpayer may agree in writing to extend the limitation period for assessment. The Commissioner may make an assessment at any time before the expiration of the extended time.

(b)Timing of Consent to Extension Agreement. In order for a consent to extend the limitation period for assessment to be valid, the Commissioner and the taxpayer must enter the consent to extension of time agreement before the expiration of the three-year limitation period for assessment described in M.G.L. c. 62, § 26(b) or before the expiration of any prior consent to extension of time agreement.

(c)Effective Date of Consent to Extension Agreement. The consent to extend the limitation period for assessments is effective upon the date the consent is signed by both the Commissioner and the taxpayer.

(d)Consent to Extension Agreement Applicable to Overpayments. If the Commissioner determines during the extension of the limitation period for assessment that the taxpayer has made any overpayment, the Commissioner will deduct the overpayment from any deficiency assessment and will refund any balance of the overpayment determination as provided in M.G.L. c. 62C, § 27 and 830 CMR 62C.26.1(17).

830 CMR, § 62C.26.1

Amended by Mass Register Issue 1307, eff. 11/30/2015.

Amended by Mass Register Issue 1333, eff. 12/5/2016.

Amended by Mass Register Issue 1485, eff. 12/23/2022.